As Nike Prepares Q1 Earnings, Here’s What Investors Are Watching

It’s a big day for Nike, which posts its fiscal first-quarter results after the closing bell.

Market watchers have estimated earnings per share of 71 cents with revenues of $10.43 billion, compared with 62 cents a share on sales of $10.18 billion in the previous year period.

The sportswear giant’s stock, however, has dipped slightly over the last six months as it faces macroeconomic headwinds and heavy competition from athletic rivals.

The company’s shares have fallen behind Germany-based Adidas AG and Canada’s Lululemon, which have gained market share amid athleisure’s continued momentum. In a note to investors, brokerage firm Piper Jaffray attributed the latter’s bullish stance to a “better than expected performance in China,” as well as “improving profitability in Europe.”  Lululemon’s stock, for instance, has shot up more than 50% year-to-date. Adidas remains Nike’s biggest competitor and has surged in recent years with the help of high-profile celebrity collaborations and appealing off-court merchandise.

Nike also faces pressure resulting from President Donald Trump’s trade war with China, particularly from the administration’s fourth tranche of tariff hikes, which impacts footwear. The first batch of the fourth tranche took effect on Sept. 1, when Washington hit Beijing with a 15% levy on $112 billion worth of Chinese goods. Additional tariffs on $188 billion worth of items will be implemented on Dec. 15.

As it comes to terms with increasing duties on Chinese imports, the Beaverton, Ore.-based business has shifted production to other regions, with about 20% of its output now produced in China.

However, the past quarter also presented a number of major growth opportunities for Nike, which dominated at the Women’s World Cup, saw a surge in foot traffic during the back-to-school season and acquired analytics firm Celect to mine data from consumer behavior. In addition, Wall Street is still enthusiastic about the brand’s product lineup — and minus last quarter, Nike’s EPS has consistently beaten analysts’ estimates for the past five years.

As of 10:15 a.m. ET, Nike’s stock was up 0.034% to $87.72.

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